FINALLY!

  

The 2021 New York State income tax returns, forms, schedules, and instructions are finally available to download online on the website of the New York Department of Taxation and Finance.  Click here.

A brief review of the 2021 IT-201(resident) and IT-203 (non-resident and part-year resident) returns indicates they are exactly the same as the 2020 forms – no changes to the descriptions and line numbers on either form.

The instruction booklet for both forms do not have a page to identify “What’s New” for 2021 returns as they usually did in the past – but a NY state tax update I “attended” in January (part of an online webinar) discussed the following changes of note –

* New York now has a PTET (Pass Through Entity Tax), which is the Empire State’s version of NJ’s BAIT tax scam, to assist NY taxpayers in evading federal income tax.

* New York continues to decouple from federal tax law changes.  It currently does not follow the temporary or permanent federal changes to the Earned Income Tax Credit (EITC).

* There is a new NY Real Property Relief Credit of between $250 and $350 that is calculated on NY Form IT-229.  The NY itemized deduction for property tax paid that is claimed on IT-196 is reduced by the amount of the credit claimed on IT-229.

And while we are on the subject of state taxes, the Pennsylvania 2021 state income tax returns, forms, schedules, and instructions are also now available online.  Nothing of any consequence new for PA state returns either.  Click here.

TTFN

NJ, NY AND PA FOLLOW IRS FILING DEADLINE EXTENSION

NJ.COM reports “N.J. extends tax deadline to May 17, matching federal change” –

“But there will not be an extension for first quarter 2021 individual estimated tax payments, the statement said. Those will still be due on April 15.”

I have not seen anything on the NJ Division of Taxation webpage yet.

As For New York, according to N-21-1 –

“The Commissioner of the New York State Department of Taxation and Finance has extended the due date for personal income tax returns, and related payments, for the 2020 tax year from April 15, 2021 to May 17, 2021.” 

But, as with the IRS – 

“This relief does not apply to estimated tax payments for the 2021 tax year that are due on April 15, 2021. These payments are still due on April 15, 2021.” 

And from the Pennsylvania Department of Revenue –

“The Department of Revenue today announced the deadline for taxpayers to file their 2020 Pennsylvania personal income tax returns and make final 2020 income tax payments is extended to May 17, 2021.”

And -  

“Those who make estimated income tax payments should continue to do so on the same filing schedule that they would normally follow. This includes taxpayers with estimated tax payments due on April 15, 2021.” 

Not from New Jersey, New York or Pennsylvania.  You should check the website of your state tax agency to see if it has extended the filing and paying deadline.

TTFN

HERE WE GO AGAIN

I just completed my annual required online New York State tax preparer CPE. 

I barely prepared more than 10 NY state tax returns in calendar year 2020 – 14 total.  And I will probably prepare at least a dozen NY state returns in calendar year 2021.  So, I must register for calendar year 2021 and pay the $100 extortion fee (my invoice for a client with a NYS tax return includes a line item of $5.00 for “NY State Tax Return Preparer Extortion Fee Surcharge” – which will be $8.00 in 2021).   

This year for the first time I was automatically enrolled in all the required sessions as soon as they become available – I did not have to separately enroll in each presentation.

And this year instead of a slide presentation followed by a multiple-choice questionnaire the NEW YORK STATE UPDATES AND DEPARTMENT MESSAGES and HOW TO FILE A SALES TAX RETURN offerings took the form of an actual audio presentation accompanying the slides - equivalent to an in-person seminar (only without the ability to ask questions) with no subsequent “test”.  This format, in my opinion, is much, much more better.  The format of the remaining sessions were the same as past years.

Here are my comments on the sessions:

UPDATES AND MESSAGES - I only prepare IT-201 and IT-203 returns for employees or retired individuals, and I do not accept any new clients from anywhere. I have absolutely no need for, or interest in, business, payroll, sales, or product-specific taxes or obscure personal credits and deductions updates.  So, most of the update presentation was of absolutely no value to me – and under this new format the time wasted sitting in front of my computer screen was much more than in past years.  It would certainly be “more better” if the update presentation was broken down into separate optional components for the different types of taxes.

SALES TAX – I had absolutely no interest in this topic and paid absolutely no attention to the audio presentation.

GIG ECONOMY WORKERS AND TAXES - None of my NYS clients are, or will be, “gig workers”, so this offering was a total waste of time.  I quickly sped through the slides.

DEDUCTIONS – I actually reviewed more carefully some of the slides in this presentation – speeding through the bulk of them.  This was for the most part an update on the rules for federal Schedule A before the GOP Tax Act.

STANDARDS OF CONDUCT AND ETHICS FOR TAX RETURN PREPARERS, PROTECTING YOUR CLIENT’S DATA, and RECORDKEEPING – As usual, redundant stuff.  I quickly sped through the slides in all 3 presentations.

While the new format for the two presentations is certainly a substantial improvement over past years - as I say each year, the CPE requirement component of the registration process would still be much more effective if registrants could satisfy it by attending actual CPE seminars and workshops – in-person or online - offered by tax preparer membership organizations and commercial CPE providers. 

Upon completion of the CPE sessions I could not immediately register and pay the extortion.  I expect, like last year, it will take a few days for my completion to be processed.

Once again, this “continuing education” process was a total waste of my time.  To be perfectly honest I did not learn anything.  As I also say each year - I learn much, much more from Kathryn Keane’s NYS update presentation at the annual NJ chapter of NATP’s “Famous State Tax Seminar” than I do from the required state-created offerings.

TTFN 

NEW YORK MAKES IT OFFICIAL

New York State has now officially extended the filing and payment deadline for state tax returns from April 15 to July 15.  Click here for notice N-20-2.

“2019 returns due on April 15, 2020, and related payments of tax or installments of tax, including installments of estimated taxes for the 2020 tax year, will not be subject to any failure to file, failure to pay, late payment, or underpayment penalties, or interest if filed and paid by July 15, 2020.”

No word from New Jersey yet.  No clue why Murphy is waiting – and no reason for him not to extend the NJ filing and payment date.

TTFN

WHAT’S NEW FOR 2019 NEW YORK STATE INCOME TAX FORMS

Yesterday (Monday) New York State finally released the 2019 Form IT-201 and 2019 Form IT-203.  These forms are now available online at the NY Department of Taxation and Finance website, and online filing and “enhanced” fill-in forms is also available. 

There appear to be no changes to the format or layout of the 2019 forms.  They look exactly the same as the 2018 forms.  The few minor changes to NYS individual income taxes are -

* A few new obscure credits have been added and some expired ones have been extended.

* There are now so many voluntary contribution options on the IT-201 and IT-203 that New York has created a new Form IT-227 to claim voluntary contributions, with a total amount carried over to the IT-201 or IT-203.

* NY had originally “decoupled” from the new increased 60% of AGI limitation on the federal itemized deduction for cash (or check) contributions, keeping the previous 50% of AGI limit.  The state has changed its mind and has retroactively “recoupled” with this GOP Tax Act change – accepting the increased 60% deduction limit for 2018, 2019 and subsequent returns (until 2025). 

Speaking of “decoupling” - a reminder that NYS has “decoupled” from most of the Form 1040 changes enacted by the GOP Tax Act - 

* On NYS resident or non-resident income tax returns alimony continues to be included in income or allowed as a “adjustment to income” deduction, regardless of when the decree or agreement is dated, and there are new addition and subtraction modifications to be entered on the IT-201 and IT-203 to report or deduct alimony not reported on the 2019 federal Form 1040.  These modification codes are A-119 to report taxable alimony income and S-136 to deduct alimony paid.

* And NY continues to allow you to itemize on your NY State IT-201 and IT-203 regardless of whether you itemized deductions or claimed the Standard Deduction on your federal Form 1040. Like last year, New York Itemized Deductions are computed using the “old” federal rules as they existed prior to the enactment of the GOP Tax Act.  The deduction for property taxes is not limited to $10,000, and home equity interest on up to $100,000 in principal, all casualty and theft losses, and all previously allowed Miscellaneous expenses, including investment expenses and unreimbursed employee business expenses, are deductible on the NY return.  So, if you will be filing a NY state income tax return for 2019, your tax preparer will need information on all these deductions. 

TTFN

WHAT’S NEW FOR 2018 TAX FORMS – NEW YORK

While the 2018 New York state income tax instruction booklets have been available for weeks now, the actual 2018 IT-201 and IT-201 are finally up at the NYS Department of Taxation and Finance website.  Click here for IT-201 and here for IT-203.

I did a quick review of the 2018 tax returns and there does not seem to be any changes in the format or content of these forms.  They look exactly the same as the 2017 forms.

The big news for 2018 New York state returns is that New York has “decoupled” from most of the individual income tax changes enacted by the GOP Tax Act.

Like many states, New York bases the state individual income tax return on the federal return, starting with the federal AGI and making state adjustments, and allowing the same itemized deductions claimed on the federal Schedule A with some state adjustments.  The GOP Tax Act made multiple changes to the federal AGI and the federal Schedule A.  New York State will not allow most of these changes in calculating state income tax liability.   

(1) New York continues to allow a deduction for all qualified job-related moving expenses and an exclusion from taxable wages of employer reimbursements for these expenses.  There is a new “subtraction modification” on the IT-201 and IT-203 to reduce federal AGI for qualified employee moving expense reimbursements included in federal taxable wages and out of pocket non-military employee moving expenses. 

(2) Withdrawals from a Section 529 Qualified Tuition Program account for kindergarten through 12^th grade tuition payments are not considered qualified withdrawals for determining the taxability of distributions under the New York 529 college savings account program.

(3) While the New York Standard Deduction amounts have been slightly adjusted for inflation, they have not been as substantially increased as the federal Standard Deduction amounts have been.  And New York still allows a $1,000 deduction for each dependent claimed on the 2018 IT-201 or IT-203 (but not for the taxpayer or spouse).

(4) The 2018 New York Itemized Deductions are computed using the federal rules as they existed prior to the enactment of the GOP Tax Act.  The deduction for property taxes is not limited to $10,000, acquisition debt interest on principal of up to $1 Million is deductible regardless of when the home was purchased, and home equity interest on up to $100,000 in principal, all casualty and theft losses, and all previously allowed Miscellaneous expenses, still subject to the 2% of federal AGI limitation, are deductible on the 2018 NY state return.  And the old “Pease” limitation of itemized deductions will be used in calculating NY itemized deductions.   

(5) New York will allow you to itemize on your 2018 NY State IT-201 and IT-203 regardless of whether you itemized deductions or claimed the Standard Deduction on your 2018 federal Form 1040.  In the past If you took the Standard Deduction on your federal return, or if you did not have to file a federal return, you were required to take the New York Standard Deduction.  You could only choose to claim itemized deductions on your NY state return if you itemized on your federal return, and you would claim the same amount of itemized deductions on the NY return that you claimed on the federal return, with some state adjustments, additions and subtractions. There is a new Form IT-196 (New York Resident, Nonresident, and Part-Year Resident Itemized Deductions) that replaces Forms IT-201-D and IT-203-D.

Many tax preparers, myself included, told some clients last year that they would no longer be able to itemize and did not need to maintain and give them documentation for certain expenses for 2018 through 2025.  However, if the client lives or works in New York State they do need to maintain and provide their preparer with details of these expenses for 2018 and beyond.

There have been other changes to NY state taxes for 2018 -

(1) A special “Union dues additional adjustment” can be included in your New York Itemized Deductions for any portion of union dues paid that is not included in Form IT-196 Line 28 “Job expenses and certain miscellaneous deductions” due to the 2% of AGI exclusion.  So, in effect 100% of union dues are deductible.  The adjustment is Item K for the entry on Line 44 of Form IT-291) (see the Form IT-196 instructions).   

(2) The New York State Child and Dependent Care Credit has been increased and enhanced.  The credit amount allowed increased for taxpayers with New York AGI of at least $50,000 but less than $150,000, and, the qualified expense limit for taxpayers with more than two qualifying persons increased to $7,500 for three qualifying persons, $8,500 for four qualifying persons, and $9,000 for five or more qualifying persons.

(3) There have been some adjustments to old credits and some new credits that do not apply to any of my clients and probably most of you.

As an aside, just so you know, beginning with 2019 New York will not follow the changes to alimony enacted by the GOP Tax Act.  All alimony received is included in taxable income and all alimony paid is deducted from taxable income for calculating the NY state tax liability, regardless of when the divorce or separation decree or agreement was issued or amended.

TTFN

2017 STATE TAX FORM UPDATE

All state returns (that apply to me and my clients) are now finally up and available at the appropriate state tax agency website.

The 2017 NJ-1040 form was finally made available at the NJDOT website forms page at 11:00 AM on Monday.  As expected, there was no change to the physical format or layout of the form, except for the addition of Line 12c on Page 1 to indicate if the taxpayer and/or spouse or civil union partner is eligible to the Veteran Exemption (although the word exemption is misspelled “exeption”).

From NJDOT – items that will be accepted to document a claim for the new Veteran Exemption:

* DD-214 - Certificate of Release or Discharge from Active Duty

* DD-256 - Discharge Certificate

* WD AGO 53 - Enlisted Record and Report of Separation Honorable Discharge

* WD AGO 53-98 - Military Record and Report of Separation Certificate of Service

* WD AGO 55 - Honorable Discharge from the Army of the United States

* NA Form 13038 - Certificate of Military Service

* NAVCG 553 - Notice of Separation from U.S. Coast Guard

* NAVMC 78PD - U.S. Marine Corps Report of Separation

* NAVPERS 553 - Certificate of Separation/Discharge from U.S. Navy

* County Veteran ID Card - Veteran identification card issued by any of the New Jersey counties

* Federal Veteran ID Card - Veteran identification card issued under the Veterans Identification Card Act

Just a reminder – regardless of when you submit your 2017 NJ-1040 to the state, refunds will not begin to be issued until March 1^st.

As for the New York State resident (IT-201) and non-resident (IT-203) returns - the only change to the physical format or layout of the forms appears to be the addition of a Line 60o (IT-201) or 57o (IT-203) to add a new voluntary contribution option for the Veterans’ Home Assistance Fund”, and the addition of a line 79a (IT-201) and 69a (IT-203) to allow taxpayers to allocate via direct deposit all or a portion of their refund to NYS Section 529 college savings accounts via the new Form IT-195.

The NYS standard deduction and tax rate schedules have been adjusted as per the annual COLA.  There have been a fee changes and additions to obscure state credits, but nothing that would affect any of my clients.

The "What's New for 2017" section of the NY state income tax instruction booklets says "A recent law change amended and expanded the definition of NYS source income", but does not explain just how.  When I found out just what the state is talking about I will post it here in a subsequent post.

The biggest issue facing those who file New York State income tax returns going forward – both residents and non-residents – involves the changes made beginning in 2018 via the GOP Tax Act, specifically the “conformity” of the state return to the federal return and a NYS requirement that taxpayers who claim the federal Standard Deduction also claim the NYS Standard Deduction.

The current NYS Standard Deduction for a single filer is $8,000, compared to the $12,000 federal amount for 2018.  And for a married couple is it $16,050, compared to $24,000. 

While NYS does not allow a deduction for state and local income tax or sales tax, it does permit a full deduction for real estate taxes, now limited to $10,000 on the federal return.  Many NJ residents filing a NYS non-resident return and NYS residents pay more than $10,000 in real estate taxes.  And the loss of Miscellaneous Expenses subject to the 2% of AGI exclusion reduces both federal, and conforming NYS, itemized deductions.

It has been suggested that if NYS continues to conform to the new federal rules beginning in 2018 taxpayers who file NYS returns could see a $1.5 billion increase in state tax.

New York is not alone in having to fact this problem.  If the 41 states with an income tax almost all of them at least partially base taxable income on the federal return.  New Jersey and Pennsylvania are exceptions – they do not follow the federal return and have minimal allowable deductions. 

TTFN

WHAT’S NEW ON 2016 STATE TAX FORMS

As I previously mentioned in an introduction to an earlier BUZZ installment there is no change to the 2016 Form 1040, or 1040A.  They are “line-for-line, exactly the same as the 2015 Form 1040, except for the changes in the standard deduction and personal exemption amounts”.

 

I was waiting to see the 2016 Form NJ-1040 instructions to find out when the new $3,000 exemption for veterans became effective.  The answer was recently provided in an announcement on the NJDOT website -

 

“Under a new State law, veterans may qualify for an exemption of up to $3,000 on their New Jersey tax return for income earned in 2017. This exemption, part of a bill passed by the Legislature and signed into law by Governor Christie last October, is in addition to other exemptions or deductions for which veterans may qualify. The exemption is available for all veterans who received honorable discharges or who were released under honorable circumstances from active duty in the Armed Forces of the United States, a reserve component thereof, or the National Guard of New Jersey in a federal active duty status. Veterans may claim the exemption when they file their Tax Year 2017 returns. The exemption does not apply to 2016 income.” 

 

I have finally seen the 2016 Form NJ-1040 and the one and only change to the form, other than the year, is replacing the boxes in the bottom section of Page 1 for entering the amount of the check enclosed for the balance due (on the 2015 NJ-1040) with boxes for entering a Driver’s License Number (see below).  Otherwise it is exactly the same as the 2015 NJ-1040.

 

The changes that affect the preparation of the 2016 NJ-1040 are –

 

(1) Residents who are eligible and file for a federal Earned Income Credit can also receive a NJ Earned Income Credit equal to 35% of the federal amount.  This increased % was part of the gas tax increase deal.

 

(2) The maximum employee contributions for the various state benefit funds for 2016 are:

 

·         Unemployment Insurance and Workforce Development = $138.56

·         Disability Insurance = $65.20

·         Family Leave Insurance = $26.08

 

If you had 2 or more NJ employers during 2016 and contributed more than these maximum amounts you can receive a refund of the excess on the NJ-1040 via Form NJ-2450.

 

(3) The percentage used to calculate the allowable “Alternative Business Calculation Adjustment” deduction on the 2016 Schedule NJ-BUS-2 (and going forward) is 50%.  The ABCA deduction is now fully phased-in.

 

(4) The Fund for the Support of New Jersey Nonprofit Veterans Organizations has been added to the list of charities to which NJ taxpayers can contribute via the 2016 NJ-1040.  It is identified with code number “22” on the “Other Designated Contribution” line on the form.

 

NJ taxpayers hoping for a quick refund by filing early will be out of luck.  No NJ refunds will be issued until March 1, 2017, regardless of how early the returns have been filed.

 

And, according to the NJ Division of Taxation website –

 

“• Returns filed electronically may take a minimum of four weeks to validate and process.

• Returns filed on paper may take a minimum of 12 weeks to validate and process.”

 

So don’t bug your tax preparer if you haven’t received your NJ refund promptly. 

 

For some reason the State of New Jersey is dragging its arse – the 2016 individual income tax forms and instructions are not yet available to download on the NJDOT website.  I was able to view the 2016 NJ-1040 and instructions because a client received the booklet in the mail last week.

 

There have been no changes to New York state income taxes and the 2016 New York IT-201 or IT-203 – other than the statutory cost of living adjustments to the Standard Deduction and the Tax Rate Schedules and some changes to obscure tax credits.  The only credit changes worth mentioning are -

 

·   “NYC school tax credit - Beginning with tax year 2016, the credit will now be a New York State personal income tax credit for residents of New York City.  Previously, the credit was a New York City personal income tax credit for residents of New York City.

 

·   Noncustodial parent earned income credit - This credit has been permanently extended.  Previously, this credit was due to expire December 31, 2016. See Form IT-209, Claim for Noncustodial Parent New York State Earned Income Credit, and its instructions.”

 

There is a new requirement for taxpayers who use software to prepare NY state returns, which I do not do (highlight is mine) –

 

“The taxpayer’s driver license or state identification information is required. If the taxpayer and/or spouse has been issued a driver license or state identification card, they are required to provide that information to be entered into the software. Taxpayers must provide the ID number, issuing state, issuing date, and expiration date for all licenses or identification cards. If the taxpayer license/ID is a New York State driver license or non-driver ID, the document number found on the license/ID must also be entered. In the event that a taxpayer does not have a driver license or state-issued ID, you will be prompted by the software to indicate this. If the taxpayer does not have either a driver license or state-issued ID, marking the check box indicating that they have neither will fulfill the new requirement. We are requiring this information as an additional means of validating the taxpayer’s identification, and not having the information will not cause delays. However, if all other efforts to validate the taxpayer’s identity are unsuccessful, the processing of the refund may be delayed.”

 

The “document number” referenced above is specific to the New York State driver’s license and is typically found in the bottom right corner on the front, or on the back of the license.

 

NJ also asks for a driver’s license number, but it is optional.  Entering a driver’s license is not required for the processing of the NJ state return.

 

The 2016 New York State, and Pennsylvania, tax forms and instructions are now available to download from the state tax agency websites, as are the 2016 federal forms available at www.irs.gov.  God only knows when the NJ forms and instructions will be available.

 

TTFN

 

 

 

 

 

 

 

 

 

 

 

 

 

REQUIRED STATE CPE FOR NEW YORK TAX PREPARERS

I recently satisfied the 4 Continuing Education credits required for my ongoing registration as a tax preparer for the State of New York.  This is the second year that this requirement has been in place.  Prior to that all one had to do to be allowed to prepare NY State tax returns for compensation was to pay a $100 extortion fee.  This fee still remains.

 

FYI – each invoice given to a client for whom I prepare a NY State tax return includes a separately identified $5.00 line item charge for “New York State Tax Preparer Extortion Fee Surcharge”.

 

And another FYI – CPAs, attorneys, and EAs are exempt from this requirement.  So the State of New York does not care if CPAs or attorneys who prepare tax returns for compensation know their arse from a hole in the ground when it comes to federal or state tax law.  Actually the main reason CPAs and attorneys are exempt is that New York State already gets a registration fee from them for accounting and law license renewals.  EAs had to fight to be exempt.

 

Some things were different this year -

 

·      Last year there were 5 individual topics.  This year one had to take 10 separate topics – 9 required and 1 chosen from a group of 4 options.

 

·      Last year the “classes” were webinars – one had to listen to video presentations of the various topics.  This year each subject was presented in a “power-point-like” printed presentation.

 

One thing was the same.  The whole process was, for the most part, a total waste of time.  The information presented was for 2015 returns – the returns prepared this past tax season.  They were not for the upcoming 2016 returns – so I have absolutely no idea if there is anything new for the returns I will be preparing beginning next February. 

 

While I will admit there was some perhaps worthwhile review of items of importance, on the whole it was either redundant (same information as last year or information included in other CPE offerings I have taken on federal issues) or outdated.  To be perfectly honest I learned absolutely nothing new. 

 

I will admit that my areas of interest for NY returns is limited – I only do about 20 relatively basic individual NY resident or non-resident returns.  I no longer accept new clients, so I would not need to expand my knowledge of NY state issues.  I did not pay attention to any information that did not pertain to returns or issues that would concern my clients or my situation.

 

Also like last year, while I was asked questions in the course of the 10 “sessions”, it was not really a test.  It was a multiple choice format.  If I got an answer wrong I was told so and given the correct answer.  There was no “consequence” for initially selecting a wrong answer.  I have no problem with this.

 

Because of the new format completing the “education” took less time than last year.  And, as was also true last year, there was no charge for the “classes”.  So I wasted less time than last year and again no money.

 

As I had said in last year’s evaluation post, I would have very much liked to have learned what, if anything, was new for IT-201s and IT-203s for 2016.  But, again like last year, I will have to wait for the New York State update presentation at the January state tax update workshop offered by the NJ chapter of NATP.

 

TTFN

 

 

 

 

 

 

 

THE FAMOUS STATE TAX SEMINAR

Every year on the second Saturday in January I attend the NJ chapter of the National Association of Tax Professionals’ “Famous State Tax Seminar” at the hotel formerly known as the Woodbridge Hilton (now the APA Hotel Woodbridge) in Iselin NJ.  I think I have only missed it twice in the 20+ years it has been offered, and only because of excessive snow.

I have always said that this seminar is a “must attend” for any tax professional who prepares NJ state returns.

The purpose of the seminar is to familiarize NJ tax professionals with NJ, and often NY and PA, state tax issues and changes in the areas of individual and corporate income tax, sales tax, payroll tax, property tax relief programs, and, occasionally, inheritance and estate taxes.  Over the years additional topics have been thrown in, some federal, some state, and some non-tax related, but the major focus is on state taxes.

This year’s offering concentrated on NJ and NY taxes, with a brief overview of the new PATH Act added at the end.

After finding a good seat I was personally welcomed by new chapter President Tom Watkins, who is apparently a fan of my writings.   I was also greeted by fellow fan and also chapter Board member Josh Mellum.

 

As has been the custom each year, the supposed “keynote” speaker is the current Director of the NJ Division of Taxation, and this is usually the first presentation of the day.  This year we met the newly appointed, currently “Acting” while awaiting official confirmation by the State Senate, Director John J Ficara, a lawyer and a CPA with a Master’s degree in tax law.  Like his predecessor, he is a tax professional from the private sector.  However the actual “keynote” presentation was made by former Acting Director Dennis Schilling, who has returned to his prior position as Deputy Director.

While it was nice to meet the new Director, and to note his acknowledgement of the importance of tax professionals to state tax administration by his attendance, this presentation was, as has been the case for many years now, not of any true substantive value and, in my opinion, really a waste of time.  The presentation does not deal with any of the real issues of NJ state tax administration or tell us anything new that is not also covered by the state tax updates, and there is no Q+A.

The keynote presentation was followed by a good and helpful line-by-line tutorial on the NJ-1040, an abbreviated version of the chapter’s previous half-day seminar, by former chapter President and a national NATP Member of the Year Marilyn Ayers and long-time chapter Board member, and also former President, Sherril Diamond.  Some items of interest mentioned by the duo included –

ü NJ taxable wages, reported in Box 16 of Form W-2, includes employer contributions to a SIMPLE, SEP, and SARSEP pension plan.

ü There is no NJ state treatment of “statutory wages” similar to the federal treatment.  The full amount of the wages are reported as such on the NJ-1040 without any allowance for applicable deductions (the IRS permits statutory wages, and related deductions, to be reported as self-employment income on Schedule C).

ü Actually a federal issue - you should open a ROTH IRA account with something, perhaps just $500, the first year possible, i.e. the first year you have earned income, even if you do not make any subsequent contributions for a long time, to begin the start of the “5-year rule”.  The 5-year waiting period before you can take qualified distributions from a ROTH account begins on the first day of the first year for which ROTH contributions are made.

ü The federal exclusion from tax for income received from renting your personal residence for less than 15 days during the year does not apply for NJ state tax purposes.  This income is fully taxed on the NJ-1040.

Next up were 4 separate presentations by representatives of the NJ Division of Taxation’s “Taxation University” on NJ state sales tax, general updates, projects and notices, and property tax relief programs, with an excellent buffet lunch midway between the sessions.

“University” head Jake Foy, a popular former regular speaker at the annual seminars (originally part of what I called the always excellent and informative “Jim and Jake Show”), returned to the podium to start the presentations with a review of sales tax laws.  New speakers Abra Watson covered Tax Updates and Mike Kovacs covered projects and notices, and returning Alexis DeRosa talked about the property tax relief programs (the NJ Homestead Benefit and the Property Tax Reimbursement).

There was really nothing new in NJ state taxes for 2015, but the speakers did a good job explaining what little there was.  All were truly well-informed on their topics and good speakers.  I have been a consistent critic of the competence of the NJ Division of Taxation, but the “University” representatives have always been truly knowledgeable, competent, and genuinely concerned, and have successfully helped me and other NJ practitioners with individual client issues during the year.

There was a brief discussion of the delays in processing refunds on state returns, with Dennis Schilling providing an “assist” to speaker Abra.  There will continue to be some delays with 2015 refunds, as the Division continues to take additional steps to verify taxpayer identity in an attempt to avoid fraud and theft.  I personally did not experience any serious delays with my clients’ 2014 NJ refunds – the serious problems involved federal refunds and were, in my opinion, more a result of IRS budget cuts and mismanagement than additional identity verification.

Two new item – Electronically filed NJ-1040s will request the taxpayer’s driver’s license number, but this is an optional (for now) entry and returns will still be normally processed if this information is not provided.  And NJ corporate income tax returns (CBT) prepared by a tax pro must now be filed electronically (which is going to be a problem for me).

The other items worth reporting involve the Property Tax Reimbursement (aka “Senior Freeze”) program –

ü The 2015 PTR income threshold is $87,007, although there is no guarantee that this will once again drop to $70,000 at budget time.  The PTR-1 or PTR-2 applications should, nevertheless, be completed and submitted as long as 2015 income, which is different that the NJ Gross Income reported on the NJ-1040 and used for the Homestead Benefit application, is within this threshold.   

ü You can check the “base year” amount for the PTR-2 application online at the NJDOT website.

ü If a qualified NJ homeowner is already in “the system” with a base year and moves to a new residence they can file a PTR-1-C to re-establish a new base year after 2 years.

ü A qualified NJ homeowner who should have been receiving reimbursements for prior years, but never submitted an application in the past, can “retroactively” establish an initial base year by going back and filing a PTR-1, and verifying payment of real estate taxes, for every missed year (each year must be a PTR-1 and not PTR-2).  The homeowner will not receive the appropriate reimbursements for past year property tax increases, but will establish a base year from the first PTR-1 filed for use going forward.  The PTR-1 forms for past years are available on the NJDOT website.

Issues were raised about the filing process for each of the property tax relief programs by attendees. 

NJ Homestead Benefit – the application for this benefit, previously known as the Homestead Rebate, had originally, and for many years, been a part of the NJ-1040 filing, with the application eventually becoming form Page 4 of the NJ-1040 known as HR-1040.  However, for the past several years the application has become a separate filing, with the separate application package not mailed out until May.  An audience member felt, as I have for years now, that the application should be returned to a component of the NJ-1040 filing.  This would save the Division tons of money, as it would not need to do two separate mailings and processings, and would assure that all qualified homeowners properly applied, as the information, already available on the NJ-1040, would be entered at the time of the NJ-1040 filing by the preparer, paid or otherwise.  In addition, it would not require additional work for tax professionals after the end of the tax filing season.  Alexis promised to take this suggestion back to the “office”.  

Property Tax Reimbursement – the initial deadline for filing this application has always been June 1^st, but historically this deadline has consistently been extended each year to eventually October 15^th or 31^st.  While tax preparers are aware of, and expect, the annual filing deadline extension, in the back of our minds is always the possibility the the deadline will not be extended one year and many qualified homeowners will be royally screwed (something the State of NJ often does to its taxpayers).  An attendee asked why the initial deadline is not officially changed to October 31^st.  The answer is apparently that the June 1^st deadline is part of the statute that created the program (with a provision that the deadline may be extended by the Treasury Department), and the law itself must be changed to permanently change the initial filing deadline.

This suggests two actions that NJ-NATP Board should formerly undertake –

(1)  Write to the NJ Division of Taxation, or the Treasurer and/or Governor, and request, on behalf of the 1100+ members, that the application for the Homestead Benefit be reinstated as a component of the NJ-1040 filing, perhaps on an expanded NJ-1040-H.

(2)  Write to the appropriate state legislators and request, again on behalf of the 1100+ members, that the Property Tax Reimbursement statute be revised by the legislature to permanently change the initial filing deadline for the PTR-1 and PTR-2 to October 31^st.

Noticeably missing from the NJDOT line-up was a speaker who I had often referred to as the “comic relief” in my past reviews – John Kelly.  John was also a truly knowledgeable, competent, and genuinely concerned speaker, providing valuable information each year but in a somewhat comic fashion.  I learned that John had retired from the Division, but that he was present at the seminar in the audience as a participant NATP member.  It was John who told us that the PTR deadline was part of the statute, and suggested that NJ-NATP write to legislators to request the permanent change.  So, although not an official representative any more, he still contributed valuable information to the presentation.

The day ended - after the also “famous” desert break, which this year included sugar-free cookies for us diabetics (thanks, no doubt, to the efforts of Marc Standig) - with a presentation by frequent popular contributor Kathryn Keane from New York, who spoke first on NJ state tax updates and ended the seminar with the brief overview of PATH.

There was nothing much new for NY as well, except for –

ü The IT-2 and IT-1099-R filing requirement is back for paper returns.  These are separate returns that manual filers must waste time completing instead of merely attaching state copies of W-2s and 1099-Rs with state tax withholding to the returns.

ü Prior year NY returns must now be electronically filed (unless you are exempt, like me, for not using flawed and expensive tax preparation software) and amended NY returns can now electronically filed.  

ü The State of New York is going overboard on required additional due diligence and recordkeeping for Earned Income Credit applications, making tax preparers Social Worker duties even more excessive and time-wasting.

As usual the NJ-NATP “Famous State Tax Seminar” was an excellent offering, and the chapter Board and Education Committee deserve kudos for a job well done.

FYI – the NJ chapter is offering a half-day ACA Update and Review workshop on January 21^st, also at the APA Hotel Woodbridge.  The seminar is presented by former fellow tax blogger, and online buddy, John Sheeley, an excellent and knowledgeable presenter.  Click here for more information.   

TTFN